Jobless claims likely to remain low — as will worker raises

The number of Americans filing new applications for unemployment benefits is very low, but perhaps not quite as low as the government reported last week.

Initial jobless claims are expected to rise above the 300,000 mark just one week after falling to an eight-year low of 284,000, according to economists polled by MarketWatch. They predict claims will increase to around 308,000 in the seven days ended July 26.

The drop in claims last week was not a surprise, but the size of the decline was. The last time claims were that low was in 2006, when the unemployment rate was around 5% compared to the current rate of 6.1%.

One possible cause is the annual shutdown in manufacturing plants to retool for new production, especially among auto makers. These summer shutdowns often make the claims figures gyrate in July and early August.

The four-week average, which reduces the impact of weekly ups and downs, is still hovering above 300,000 and is a better indicator of labor-market trends.

Even if weekly claims did rise last week, though, the labor market is clearly on the upswing. The U.S.has added more than 200,000 jobs a month for five straight months and another 200,000-plus gain is expected in July when the government on Friday issues the employment report. Layoffs are bouncing along modern record lows and job openings are the highest since the recession ended in mid-2009.

What economists are watching closely is if the rise in employment is translating into higher wages for workers. The employment cost index that measures how much companies pay in wages and benefits will offer further clues. The index is projected to climb a modest 0.5% in the second quarter after a 0.3% gain in the first quarter.

The claims report and ECI index will both be released by the Labor Department at 8:30 a.m. Eastern.